The economic powerhouse of the Indian sub-continent is aiming for an annual growth rate of 10% and a consequent reduction in poverty.

Presenting the annual budget, the nation's finance minister Palaniappan Chidambaram announced:

  • Defence spending up by 7% to $20 billion (€16.83bn; £11.44bn).
  • Increased spending on rural infrastructure of $4.2bn.
  • A 31% increase in spending on education.
  • An increase of 22% on spending on health.
  • Old age pension to be increased.
  • Contracts to build five mega-power projects to be awarded by December.
He also pledged that India will build 1,300km of "access-controlled" highways linking key cities.

In addition, some 96% of the Golden Quadrilateral, a major highway project connecting the four corners of India with the capital Delhi, will be completed by the end of 2006 and the entire project by 2008, he said.

The minister also announced a 5% increase in cigarette tax, a cut to 16% of tax on small cars and no changes in personal or corporate tax rates.

India's economy has now grown at an average rate of 7% over the last four years, mainly driven by the services and industry sectors.

Data sourced from BBC Online; additional content by WARC staff